With 23 years of experience as a criminal lawyer, Puerto Ricos new Ports Authority chief says he will straighten the agencys finances by rooting out corruption.

BY EVELYN GUADALUPE-FAJARDO

The resurrection of the Ports Authority: Ports to give new life to the island's regional airports and cruise industry

Being married to the top federal law enforcement officer on the island was not a job requirement. Nor where his 23 years of experience as a criminal lawyer, two of them as Deputy Chief of the U.S. Attorneys Offices Criminal Division in Washington, D.C.

But Miguel Pereiras more-than-passing acquaintance with law and order will serve him well in his new post. The new executive director of the Puerto Rico Ports Authority, has before him the daunting task of rescuing from near death an agency that for years has been afflicted by bad management and corruption scandals that have led to criminal charges and financial disaster.

With just 20 days on the job, Pereira has taken a cue from Governor Sila Calderons management handbook and has vowed to guarantee fiscal rectitude and transparency in the agencys business.

But Ports new chief will be more than just its top cop. Returning the agency to financial health tops his agenda. His priorities there include finding ways to pay the millions of dollars owed in vacation pay to the agency employees and secure much-needed Federal Aviation Administration (FAA) grants to allow him to undertake crucial capital improvement projects.

From the FAA certification of the Antonio Rivera Rodriguez airport in Vieques to allow landing of larger aircraftto more ferry services to Cuelbra, to the reallocation of land usage in the ports area, Pereira is already fully engaged in the business of the agency that runs every island airport and maritime portexcept Ponce.

CARIBBEAN BUSINESS sat down with Pereira to report in detail some of his strategic plans as new chief of the Ports Authority.

Ports financial burden

The Ports Authority has been plagued with mismanagement for years. But during the last administration it has been particularly under fire, following corruption allegations against several high-ranking officials. Former Executive Director Herman Sulsona and former deputy director Francisco Rovira were allegedly linked to schemes of inflating the cost of services rendered to the authority and paying for services never rendered.

Roviras case is still being heard in the courts, while Sulsonas alleged illegal acts are still under investigation.

The agency has also made headlines for years thanks to its financial distress.

"Ports has a financial picture that has been affected by irresponsible actions," said Pereira.

"This month, Ports has had to pay a $12 million fine due a judicial discrepancy that constitutes to a fourth penalty for failure to pay a debt that originally didn't even reach $1 million for accrued vacation pay," Pereira said. "Instead of paying the debt as mandated by numerous courts, the penalty has kept increasing."

The Ports Authority is carrying a total of $93 million in accounts receivable.

"There was no concern to straighten its financial obligations," Pereira said. "This agency didn't even know what it owned, there was no inventory of real property."

Pereira has stepped in and ordered that the agency organize a collection plan and an inventory of all its properties.

An example used by Pereira is a dry dock, located between Santurces Stops 15 and 16, which is the only one of its size in the Caribbean and has been negligently abandoned.

The Ports Authority will issue a Request for Proposals to see if anyone has an interest to invest $8 million to renovate it and lease it.

"My mission is to pay our debts on time, like a corporation," Pereira said.

Improving the agencys credit rating is also a priority. Pereira believes the agency will meet its obligations.

"The agency is not insolvent, we pay our obligations as they mature," Pereira said. "We will have capital investment deficiencies because most of our properties are adjacent to the sea, which requires high maintenance."

Pereira vows to correct a long-standing practice at the agency: doing business with deadbeat clients. According to Pereira, it was customary in the past for customers who owed money the agency money to change their company name and start doing business with the Ports Authority again.

"How can I have confidence in doing business again with people who haven't paid their debts? That will not happen," Pereira said

No privatization for Rafael Hernandez Airport

It is common knowledge in Puerto Rico that the Rafael Hernandez regional airport in Aguadilla, formerly the Ramey U.S. Air Force base is a sorely underutilized piece of prime airport infrastructure.

It boasts the longest runway of any aviation facility in the Caribbean and South America, measuring 13,000 feet or more than two miles long (including its overrun) and is surrounded by over 1,200 acres of undeveloped land. Compared to Puerto Rico's main airport Luis Muñoz Marin International in Carolina, that measures only 75 acres and is developed to its fullest according to FAA regulations, Aguadilla has an enormous economic development potential.

Still, or perhaps for that reason, the Calderon administration believes that the Aguadilla airport is too much of a valuable jewel to let it go into private hands.

"The Aguadilla airport has a privileged geographic location and surrounding land area that we consider it to be of extraordinary potential," Pereira said.

So much that Pereira contemplates transforming Aguadilla's undeveloped land into an industrial park to house new or expanding manufacturing operations.

"What we [government] won't permit is for existing manufacturing plants located in other regions of Puerto Rico, to relocate to the airport because that would not solve the island's unemployment problem," Pereira said.

It is still undetermined who will be the person or agency to manage the project. However, Pereira, along with Puerto Rico Tourism Co. executive director Jorge Pesquera, Department of Transportation Secretary Jose M. Izquierdo and an infrastructure advisor will visit the site to analyze what is needed in order to begin development.

"There are a few minor repairs that must be done, for example, fixing a ramp that is being used by Caribbean Transportation Services, a subsidiary of Federal Express that handles bulk cargo," Pereira added. "Along with investing $1 million to renovate three existing hangars."

But most importantly, Pereira says the runway at Aguadilla airport is in fairly good condition.

"I look at Ports as a developer of space and I am personally in charge of managing that space that belongs to the agency," Pereira said. "I expect that Ports will participate in the planning of this project."

Another project in the works at the Aguadilla airport is the construction of a new U.S. Postal Service hangar for the distribution of the west coast regions mail with the new 006 zipcode.

Mega liners get new homes

The number of cruise ship passengers visiting the Port of San Juan has jumped 37% in the past 10 years, paralleling the climb in the number of people taking cruises. In fact, cruising has been the fastest-growing segment of the vacation market for the same period.

And the Ports Authority wants to continue to capitalize on this trend.

In December, the Ports Authority signed a deal with Royal Caribbean to build a prefabricated building at the Pan American dock to accommodate the cruise lines Eagle-class vessels (142,000 ton, over 3,000-passenger capacity ships).

The $17 million investment to build a temporary facility to accommodate Royal Caribbeans Adventure of the Seas, scheduled to homeport at San Juan starting in November will be split equally by the government and the cruise line.

According to Pereira, there were no funds reserved by the past administration for this project. Due to a contractual obligation, Ports will have to come up with the funds.

Royal Caribbean's prefabricated building will have areas for the cruise company's internal operations such as U.S. Customs office and airlines pre-check-in area.

Part of the investment requires the installation of air conditioning to the new building and repairs to the docks sheet piling, and dredging to deepen the anchorage area for the megacruise ships to 34 feet.

Ships that designate San Juan as a homeport are profitable for the Ports Authority because the vessels are serviced in the harbor for fuel and other supplies, and every passenger aboard must pay a head tax to arrive and depart from the island.

The pier project also includes the construction of a new road to give buses direct access to Expressway Baldorioty de Castro Ave. for the purpose of transporting cruise ship passengers to the airport.

In addition, Royal Caribbean has been approached by Ports Authority to contemplate future development for its smaller cruise subsidiaries in Cuelbra and Vieques.

"My goal is for the cruise industry to understand that Puerto Rico is more than just one island and that the other two islands belonging to us have a series of enchantments and necessities," Pereira said.

The Ports Authority is also having preliminary discussions with Carnival Cruise Lines to invest in Pier 4 in Old San Juan to accommodate its mega liners. Pereira wants to make sure the Port of San Juan offers competition between major cruise lines.

Carnival's project would entail investing $5 million for interior as well as exterior work without changing the existing facility's facade.

"Pier 4's existing facility needs a series of interior connectors that would permit cruise ship passengers to board and disembark at a higher floor level," Pereira said.

Also under evaluation is a government-funded project to accommodate in-transit vessels at Pier 3.

In-transit or port-of-call cruise ships, which make San Juan one of many stops in their itinerary, are profitable for the merchants in Old San Juan.

"We want to redo Pier 3 to accommodate in-transit passengers," Pereira said. "Puerto Rico also has to worry about converting itself to a greater in-transit destination. Those are the customers who stop here to sightsee and shop, contributing to the local economy."

Redoing Pier 3 will cost the Ports Authority at least $50 million, and as a result Pereira will have to put that project on the back burner for now due to a lack of funds.

FAA certification for Antonio Rivera Rodriguez Airport

In the next 90 days, the Antonio Rivera Rodriguez Airport in Vieques should be FAA-certified to receive larger aircrafts. This will help to attract more tourists to the small island.

The government has vowed its commitment to Vieques as far as transportation is concerned.

It is estimated that the Ports Authority will invest $500,000 to upgrade the Vieques airport in order to receive FAA certification.

Part of the certification process requires that the government deepen and thicken the airports landing ramp to support the weight of an American Eagle aircraft.

Isla Grande Airport, a valuable piece of land

"Locals have a historic connection with Isla Grande airport," Pereira said. "They see it as an airport when they occasionally land and depart from there, but most of the time it is solitaire."

Pereira views it differently. He sees the runway at Isla Grande as a road that leads to nowhere.

He questions the land usage of the Isla Grande airport. "Isla Grande lies on 50 acres of land that is worth at least $1,000 per square meter. When you calculate the total, it comes out to be a piece of land worth $200 million," Pereira said. "To my understanding every activity in Ports should be questioned."

Luis Muñoz Marin Airport

Pereira has said publicly that the Ports Authoritys planned investment in infrastructure projects for the next three years amount to over $125 million, but the agencys financial condition will force him to evaluate the financial viability of those projects closely.

However, he does support three projects at LMM airport. One is the construction of the expansion of the north and south taxiways at $48.1 million, the development of a new $12.6 million area for general aviation and the construction of Terminal A, at a cost of $40 million. At the present, LMM airport has three terminalsB, C, and D.

Ferry expansion

The Ports Authority will invest $3.6 million to buy a new and larger ferry80 feet longer than the existing onesto double cargo space to the ports of Vieques and Cuelbra.

Currently, the Ports Authority runs two ferries that transport Puerto Rico cargo and passengers to and from Vieques and Cuelbra.

Pereira is also exploring the possibility of lowering the standard dock fee to lure a privately run transportation company to enter the islands ferry business.

"We are considering the idea of allowing someone else to enter the business and help us with Vieques and Cuelbras transportation problems," Pereira said.

Dredging Port of San Juan

The Ports Authority is dredging the channels of the Port of San Juan to allow the entrance of larger vessels.

The $45 million projectco-funded and undertaken by the U.S. Army Corps of Engineersis being carried out to bring the channels depth to 40 feet. The Ports Authority contributed $19 million.

There are two phases for this project. The first phase, which included the dredging at the Puerto Nuevo Channel, the Graving Dock Channel (34 feet deep), and Sabana Approachthe area where vessels can dock, was completed. [I dont understand this paragraph.]

The second phaseexpected to be completed by Decemberincludes widening and realigning the entrance of the San Juan Bay, Bar Channel, and Anegado Channel.

BIOGRAPHY BOX

Miguel A. Pereira, executive director of Puerto Rico Ports Authority

Education:Bachelor's degree in general studies at the University of Puerto Rico; Juris Doctor from Hofstra University in Hempstead, New York.

Experience:31 years in public service with the federal government. He was a pilot in the U.S. Air Force and a lawyer and judge for 23 years. In the last 10 years, Pereira worked at the federal Justice Department as Deputy Chief of the U.S. Attorney's Office's Criminal Division in Washington, D.C. and as a member of the Death Penalty Committee of former Justice Department Secretary Janet Reno.